Richard Savage, 68, has been a mainstay of Inman Square in Cambridge for over 30 years.
On the announcement of the sale of his agency to the KW Insurance Agency, Mr. Savage sat down with Agency Checklists to reflect on his career, the state of the insurance industry and why independent agents still matter.
How did you become an independent agent? Did you have family members in the business?
No, I didn’t. I started in 1979 when I bought an agency in Cambridge, Mass. in Central Square. Prior to that – I had experience in the insurance business, just kind of free-lancing and working with some wholesalers.
But that is where I got a very strong understanding of the agency system which was quite different back in the mid-’70s when I started. It was all basically very wholesale, place your business, yes we will write it, no we won’t write it, but I found it extremely interesting and that is when I decided to buy my agency and I stayed with it 32 years and 2 months.
I’ve met some of the most phenomenal people, from A to Z, from Main Street to scholar to celebrity, and it has been fun.
How big is your agency?
I started out at around $300,000.00 in actual premium. Sounds like a very little amount, but we are going back to 1979 – And it rose to over $2 million. But what made my agency very attractive to buyers was that we have always had a high retention rate, it’s been in the high 80s low 90s for years.
That’s quite a trajectory over the years.
A lot of hours and a lot of hellos and a lot of community involvement.
Who does your company represent? Has your appointments changed over the years?
Well, through the years I remained very, very consistent.
In 2006, however, my agency was at a turning point and I decided to make a conversion. I went with the Arbella Mutual Insurance Company. In all honesty, I couldn’t have done it without them. They made the whole process seamless and as a result, I believe we had a retention rate of about 92%-95%. It has been a great relationship, where I went on to make Admiral status with them three years in a row. I believe my relationship with Arbella was one of the strongest selling points I had once I decided I was really going to sell the agency.
Presently, now, as a result of the acquisition, we are representing a variety of the leading insurance companies in Massachusetts including, Commerce, Travelers, Arbella, Hingham Mutual, Norfolk & Dedham, Mass Property and an array of wholesalers that we write a lot of non-admitted product through in the excess markets.
When did you decided to sell your agency? It must have been hard to decide to sell.
It took me years. The head, the head always says it’s time to go. But if you can’t put the head and the heart together, you’re not going anyplace. Because it’s the most difficult thing for an independent agent who likes to, to socialize, who likes to communicate.
That is their identity, and that is their person. Politicians represent districts. Agents represent their constituency, which is their client base. And I will try to keep that identity as long as I’m sitting in this office. Even though, not as an owner anymore.
So how did you actually go about selling your agency?
Well it wasn’t a knock on the door. As big an industry as we are, we’re basically a very small family. And when you start circulating the word to interested or industry people –You start receiving letters; you start receiving calls, and I’m very pleased that we were, we’re a pretty healthy agency.
And I think we all fantasize, oh, wouldn’t it be nice to go to some island. I’m going to quit and I’m going to take life easy. Very easy to say, very hard to do.
It’s that identity that becomes the key. Good morning Richard. Oh Rich, by the way, thank you very much. You straightened out that matter for me last week. You’re entirely welcome, and you walk away and say, I forget his name, but I must have done something good.
I started fantasizing about the idea, but I began to procrastinate because I said, ooh, wait a minute, what are you going to do afterwards? And it was quite frightening. Very frightening.
It must have been hard to let go.
I think the biggest issue for the independent agent that was acquired, and, and I’ll try to explain this to you in a nutshell. With the agent that’s being acquired, he wakes up and he finds, oh my God, I’ve lost my identity. It’s not here anymore.
But that’s not true, if that independent agent stays with the people that acquired him, and keeps that contact and communication open with his clients, it makes for a very, very smooth transition.
So that is how you structured the sale and transition of your agency? You have stayed on to help rather than leaving that day?
There’s no question. I didn’t give up my desk. I don’t give up meeting my clients. I’m planning to, we discussed at least a two year period. And if all goes well, it’ll be that. We’ll just have to wait and see.
And I’m working with people that are younger, more advanced technologically, and I’m so challenged by it. As I said in the earlier part of this interview, how do you put the two together? How can you still love the client, have the client love you, and bring in the technology in a rhythmic way, in a positive way, to blend and work.
And I’m finding out that it can be done. I’m finding out that keeping a big 5‑pound diary book on my desk, or a 4‑pound blue file, it’s so much easier to have an online activity created that someone’s going to say to you, oh Richard, it’s Wednesday and this is one of your activities. You have to call John Doe to see if he wants to add or eliminate this individual from the policy.
So my hat is off to this type of new way of doing things, because it’s new to me.
And how is going, day to day?
I think, you know, in all fairness, to staff that I’m working with, we’re learning from one another.
They’re getting some of the old school blend, so we’re feeding off one another, and that makes for a perfect rhythm, when the seller of the agency is helping the agency transition to new ways, with new staff and to give the client buying the products the confidence in where they’re doing business and where they’ve been doing business for almost 30 years.
What about your employees what happened to them?
Well, they were not fired. One was 76 and was ready to retire and the other was in her 50s and wasn’t really interested in staying on.
But, why did you stay?
I have clients as old as 30, 31, 32 years that have been in this office, and some, even with the person that I succeeded from in1979. And, it’s a beautiful thing when you can transition with those clients and kind of go into the new age of modern techniques and technology, but make no mistake – if you depend on technology, the client can lose faith and confidence.
If you can blend the two, it’s a win-win for the agency and the client. And that’s what is giving me some identity back. Because I’m working with my clients and I’m working with people that are working in this new age of technology.
The industry has changed quite a bit since you entered into the insurance business? What are your thoughts about it all?
I worked with a manual, a pencil and piece of paper, and direct with the client, and that’s how I put a contract together. Am I opposed to computerization? Heck no. I think it’s wonderful, and I want to hang around for quite a while to see how technology will fit in, in these times. My only question is, and I believe it’s happening because at 68 years old, I’m beginning to see it, if you can put technology in rhythm with the client, and don’t lose that communication with the client, it’s a win-win for the agency system.
Do you think there is still opportunity for independent agents in the MA marketplace?
The best is the independent agent.
Has deregulation been good for the independent agent in your opinion.
For, for many years, for many years, like other agents, I sat back…in the early years, it was so easy to become complacent. Before deregulation, you say you want insurance, no problem, the rates in Massachusetts are set by the Commissioner, they’re all the same, open up the Bible, give a rate for the coverages the person wants.
The independent agent who took that attitude was wrong, because there was more to just rubber stamping a registration. There is trying to understand the client, his needs.
Now with deregulation you better know what you’re doing. Yes, the direct writers are here, and quite frankly, when people talk about Liberty Mutual to me, and say oh, they’re a direct writer. Well, they have every right to be here, they started here, they’re domiciled here, and they do their job.
The independent agents can do it just as well. I welcome deregulation. I think it was the best thing that happened because it’s going to put a little more speed into the agent, the independent, and it’s going to keep him in tune with what his job is. Know your community and know your products, and have a full understanding of the insurance aspect, because we are in financial services. It woke the independent agent up. And it’s good. It’s healthy.
So you don’t seem at all worried about the future of the independent agent?
As long as agents come in and don’t just function in a reactionary manner, rather function in a progressive manner and understand their products, they will do well with the people they service. And they will compete against the direct writer.
There’s a lot difference between a 1-800 number and saying I got a problem, I’m going down to see my agent, and that agent is there, and can be there after 5:00 and can be there after 6:00, and if necessary, come in on a Saturday, which I’ve been doing for 32 years.
My greatest delight to this day is taking my briefcase, making an appointment, calling Mr. and Mrs. Jones, Sally and Charles Jones, and going into their home, because this the only time they can see me, and it’s such a delight when I walk into a home, and the wife says, oh hi Richard, we expected you. Come on in. Want a cup of coffee? Let me go get Charles. Oh honey, the insurance man is here.
And then he comes downstairs and you sit at a table and you conduct business.
That doesn’t happen much any more
Well it happens. It happens with this guy.
What piece of advice can you leave with us for other agents just starting to think about their exit strategies and or agency perpetuation?
Know your markets, know your customers and when your heart and head have come together on the idea of transitioning from being an agent, give me a call and we’ll talk.
You can reach Richard Savage, The Savage Insurance Agency, Monday through Saturday, same as always, at 617.868.8780. You can reach Agency Checklists anytime by contacting us here.